EABL reaches for the bottom with Sh460 vodka

KENYA – Beer maker EABL has launched a Sh460 bottle vodka as it seeks to gain a bigger share of the low-income consumers’ market to make up for dwindling Senator Keg sales.

The regional brewer is selling Chrome Vodka, a spirit priced at Sh460 for a 750ml bottle, in Nairobi, Nakuru and Mombasa. The quarter litre bottle of the brand is going for Sh160.

The pricing of Chrome Vodka will see East African Breweries Limited (EABL) fight it out for market share with the likes of London Distillers and Kenya Wine Agencies Limited (KWAL) who have similarly priced products.

“We introduced Chrome Vodka after we realised that there is a growing demand for white spirits in the mainstream category,” said EABL’s managing director Charles Ireland in a Friday interview.

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The introduction of a 50 per cent excise tax on Senator Keg in October 2013 saw sales of the low-priced drink fall rapidly following a sharp price increase.

This forced EABL to step up its innovation to cushion its bottom line, with Mr Ireland emphasising this urgency saying they needed to “think more aggressively on how to expand the business.”

In November 2013, EABL launched Jebel Gold, a Sh10 per 30ml spirit sold in kegs which was aimed at low-income consumers who had ditched the pricier Senator Keg and consumers of illicit drinks.

A month later, Senator Dark Extra was also introduced into EABL’s rapidly growing portfolio. Senator Dark Extra has a higher alcohol content (7.5 per cent) than Senator Keg (5.8 per cent) but is cheaper.

EABL is banking on the introduction of Chrome Vodka which, just like several of EABL’s latest brands, is targeted at the lower end of the alcohol market to grow its top line.

“Senator Keg is now of marginal importance,” Mr Ireland said a month ago when announcing that EABL’s net profit for the six months to December had grown 11 per cent to Sh4.6 billion.

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EABL categorises Chrome Vodka as a mainstream spirit, the same grouping in which Popov Vodka and Kenya Cane – which the brewer distils – also fall.

The drinks are both retailing at approximately Sh550 for the 750ml bottle while quarter litre equivalents are going for Sh185 and Sh220 respectively in most supermarkets.

A 750ml bottle of London Distiller’s Kenya King retails at Sh410 (Sh220 for 250ml) while Tanzania Distillers’ (a subsidiary of multinational brewer SABMiller – sells Konyagi at Sh450 (Sh170 for 250ml.

In EABL’s half year to December 2014, it is only the mainstream category which did not post a double-digit increase in sales recording a seven per cent growth.

The emerging spirits category – which has brands like Jebel Gold and Liberty – recorded a 28 per cent increase in sales while premium spirits like Johnnie Walker Red Label and Smirnoff Vodka grew by 32 per cent.

March 17, 2015; http://www.businessdailyafrica.com/Corporate-News/EABL-reaches-for-the-bottom-with-Sh460-vodka/-/539550/2654402/-/e4k443/-/index.html

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